Wednesday, August 29, 2012

A Party And a Nation Meets Its Vice President Nominee

Republican Vice Presidential Nominee Paul Ryan

In politics the game is to tell people what they want to hear and not at times the true facts. In a race so polarized as it is, the 2012 presidential campaign takes things to the next level. With very few undecideds and certainly a lot of people holding exceptionally strong and unwielding views about politics it is a process of galvanization of your core supporters.

Tonight Paul Ryan, the Republican vice president nominee did just that. His speech was simple, accessible and at times eloquent but it also included some glaring inaccurances. The Democrats will certainly have a lot of ammunition to throw back at him at their convention and also in the vice presidential debates in October. The sad thing is a lot of it won’t stick. Paul Ryan stuck to the core beliefs of many modern die-hard Republican supporters. He hammered the issues of increased debt, interfering government and the supposed evils of Obamacare. He took no mercy in showing the failure of the main templates of Obama’s run for the presidency four years ago of hope and change. To many there is no point in arguing these issues. The Republicans have painted a rich and fruitful tapestry for their strong supporters that will overlook what Democrats will call the deceptions to be found in Paul Ryan’s speech.

There were indeed quite a lot of them. Ryan’s speech started by depicting a grim economic situation of a failed recovery with one in six Americans in poverty and the loss of America’s much cherished triple A bond rating. No matter how much the Democrats have tried to say otherwise, statistics have shown that the economic rehabilitation is still an issue for intensive care. Not just for Republicans but for many more in America that is all they see and pointing fingers as who is to blame is not going to help. Without the person on the street feeling the recovery in their bones it is a failure and the blame must fall at the doorstep of the President. Paul Ryan railed against Obama’s stimulus and has gone all out in depicting virtually all stimuluses as economic mismanagement. This is when in fact he voted for numerous stimulus programmes dating back to George W Bush’s first term as president.

Paul Ryan spoke often about one of the biggest issues for Republicans, that of healthcare and especially the Affordable Care Act known colloquily as Obamacare. While to some the issue of forcing someone to buy healthcare under penalty of a fine is wrong, how does one attack something which tries, albeit with substantial flaws to actually give universal healthcare, especially when Medicare is extremely popular? The Republicans have ingeniously latched on to the idea that to pay for Obamacare, the president intends to suck out of Medicare $716 billion. However this is false and was an effective smokescreen tonight to hide the fact that Paul Ryan’s own plan for healthcare would gut Medicare as we know it and create a voucher system instead.

One of the more contentious issues will be about Paul Ryan’s statements on debt and that President Obama walked away from a bipartisan debt deal and thus endangered the future prosperity of the nation. Ryan has made a name for himself as a deficit hawk and tonight made the allegation that Obama increased federal debt by $5 trillion, more than any other president in history. That may be so but the Democrats will point out that most of it was linked to the previous presidency and its economic mishandling. Furthermore, Paul Ryan made issue tonight about looking at the past record of Obama but failed to point out that his own signature has been on legislation in the past that has increased the debt even more than Ryan makes out Obama to have done . Furthermore, Obama was not the one to walk away from the bipartisan deal on debt and that he advised house Republicans to not support it due to the positive political implications it would have for the president.
Paul Ryan and his children

Surprisingly some of the most divisive social issues of the past few years barely got a mention. Gay marriage and issues concerning a woman’s body such as abortion were conspicuous by their absence. Interestingly enough the most noticable thing in relation to this was a small group of women protestors waving a banner calling for the Republicans to stay away from their vaginas! Later Paul Ryan to wide applause harangued Obama and government saying it had created “a country where everybody is free but us”. This of course hits on the nail of Republican hypocracy in relation to social issues. For all their advocation for less interference in people’s lives they are extremely quick to call for a constitutional amendment making marriage only between a man and woman and for a ban on abortion. It is for this reason that tonight’s speech was fundamentally a critique of Obama and his handling of the economy.

One of the more interesting inaccuracies that will be taken up by the press in the morning will be about Paul Ryan mentioning the supposed lies of Obama during his presidential campaign in promising upon election to prevent a car factory from closing. There no legitimate basis for this and in fact Obama pledged to do his best to secure the viability of the car company, not outright saving it. But the funniest bit about this lie is that the factory closed before he was elected president.

For all its inaccuracies the speech ticked the boxes for many Republicans. Paul Ryan gave them what they wanted to hear in a simple and clear way. To many that were watching tonight they would have seen a man speaking about the issues that cared directly to them – healthcare, debt and the failing recovery. The resonance of that coupled with the sheer joy of the crowd in Tampa will be etched in to their minds and will it is hoped by Paul Ryan’s speech writers and campaign crew overcome the erroneous nature of some of its facts. Tonight a nation saw their vice presidential candidate and have two months for the Democrats to do their upmost in tearing down the image his speech created among people

Monday, August 27, 2012

Gentrification and Nostalgia For What Is Lost

East Village Graffiti today

As a regular to New York City I have become accustomed to hearing about gentrification and more worryingly for some, the yuppification of various neighborhoods. Gentrification is a poisoned chalice. It makes certain areas unquestionably more livable but in the process the essence is lost as long-time residents and tenants are slowly pushed out due to higher rents.

Today virtually all the island of Manhattan has become gentrified. A strong whiff of sterilization can be experienced in some of the areas which were previously seriously dodgy. This is particularly the case in The East Village and Lower East Side. Here there is to be found ruthless property developers  more akin to other, wealthier parts of the city taking advantage of the increasing desire of people to live in these areas. While still having a particular charm and feel to them, they are completely different to what they were twenty and certainly thirty years ago.
Lower East Side in the 1970's

In the late 70’s and early 80’s the East Village and Lower East Side were virtually no go areas for many and most certainly for the wealthy elite uptown, chambered in their ivory towers on Park Avenue and so forth. However just like many no go areas in big cities it was a cheap place to live. While they attracted the down and outs of society and riddled with social hardships, many artists found a welcoming as in affordable place to live. After a time in situations like this a critical mass is reached and the whole area develops in to a flux of cross breeding of ideas and styles that attracts even more artists. Whole, vibrant and at times, extremely influential scenes emerge.

This was certainly the case for this part of New York over thirty years ago. From the run down tenements and ruins of the Lower East Side that almost looked in parts like Berlin in May 1945 came the flourishings of post-punk, new wave and most certainly no wave. This has all been recounted by a recent documentary about the no wave film scene in the late 70’s and early 90’s by filmmaker Celine Dahnier’s wonderful and accessible documentary called “Blank City” and the inspiration for me writing this article. Not only does it contain a satisfying mix of conversations with influential members of that movement but it creates oddly in this writer a nostalgia for what a vibrant and inclusive place Manhattan specifically but New York as a whole was for artists at that time. Nowadays one must pay an arm and a leg for a run down place in the East Village that has staunchly refused to be eaten up by developers. Back then a hundred dollars would have gotten you the same shack of a place but at least it was financially accessible.

Gentrification is a universal and ongoing process with an uncertain ending. Artists are slowly being pushed further and further away from the centres of cities. Some will argue it is a good thing, that in time artists will find a far away enclave from increasing rents and prices that have bedeviled them in the past from being so close to centres. However it is at times a somewhat symbiotic relationship between urban artists and the wealthy, many that later bankrolled the artists who made great art, such as Jean Michel Basquait in New York. But technology opens up other means of revenue and communication. Nevertheless gentrification as we know it will continue. Areas will lose some of their charm and vibrancy once that new giant condo gets built in the area.

Sunday, August 26, 2012

Can One Forgive Certain Follies? A Simple Observation Comparing How Spain And Ireland Blew It All

Madrid Barajas Airport Terminal 4

Of all the countries I have visited in the past number of years, Spain is comfortably within the top three that I have visited most. My family and I love the country and we have grown accustomed to it over time. Ireland and Spain have a lot in common except most noticeably in relation to the weather. However we have both been battered by the extreme recession that has affected the developed world since 2008, more so than many other nations. We both allowed a property bubble to reach catastrophic levels and then collapse, thus saddling our banks and the sovereign with debt. While Ireland’s collapse was much more swift necessitating a rapid clean up, looking at Spain is like seeing the Irish banking car crash in painful slow motion whose outcome we can pretty much guess.

Nevertheless what we did during our periods of deluded excess we can notice some differences. What we spent our cheap loans on and what we have to show for it are different. Also, the main culprits in the fuelling of the irrational exuberance are dissimilar. The follies of this period that we now have to pay for or are saddled with are numerous. But I keep asking myself is there any merit to what we have to show for it all? This may all sound strange but bear with me.

Whenever I visit Spain I generally arrive in a gleaming, well-equipped airport, a shining gateway to the nation I have just arrived in. One can only look at the vast and serenely voluptuous Terminal 4 at Madrid’s Barajas Airport. It’s welcoming canopy of pillars are bright and fresh compared to sheds like Gatwick or Newark. I effortlessly connect from many major city airports on an air-conditioned and modern metro system to a hub train station. From here I can continue my journey on a fantastically sleek high-speed train to virtually all corners of the country. I could if I want spend my time in many of the cities and marvel at the investment in civic and art facilities from the Guggenheim in Bilbao to the Parc del Forum in Barcelona.

Parc del Forum's giant solar panels
Yes I admit it is an idealistic and innocent interpretation of the situation in Spain. Many of these fabulous pieces of architecture and ingenuity were paid for with loans that will probably never be repaid and many, such as Ciudad Real’s airport or the mesmerizing Centre for the Arts in Aviles, designed by Oscar Niemeyer lay empty with no customers and groaning under mountains of debt. However many of these are public and merit goods. Spain had a property bubble just like ours, leaving empty towns and cities such as Ciudad Valdeluz and banks with impaired loans. But in Ireland, personal property and the cavalier development of it by rapacious developers was the main cause of the boom and bust. We had no regions rivaling each other to build new airports and cultural centres. It was a deeply concentrated personal greed at the expense of all others that we in Ireland are now paying for.

In Ireland all we have to show for the period of inebriated wealth are the physical hangovers of property tycoons gone bust and the sad, necrotic-looking ghost estates throughout the country. The government allowed a greedy few run roughshod over the land in a vile pursuit of personal enrichment. Now there were certainly many in local and regional governments in Spain that also benefitted illegally in the good times and are now being investigated. Bribes were paid that fuelled property speculation. However, whether out of trying to show off and take some pride they at least took a more social, bread and circuses approach to spending.

International Cultural Centre, Aviles

 Many of these follies are functioning, such as Valencia’s metro. Ciudad Real’s airport may never open, doomed in perpetuity to lying luxuriously on the scorched Spanish highlands but it could probably in the future, spurring growth in the area. Many of these white elephants could in the future be turned around and made in to something once their debts from local caja banks and others are sorted out. In fact if there is some separation of the debt from the asset, investors may be interested in them. In Ireland we didn’t spend as much in proportion on infrastructure or cultural entities as the Spanish did. What we had was a small, deluded plutocracy built on shaky loans that did their very best to enrich themselves by creating deeply personalized things such as housing; the vast majority over-priced, badly built and speculatory. For a time we were building more houses than our neighbors across the Irish Sea, a nation with close to fifteen times our population. What good is it for anyone to have decaying houses strung around the countryside that will never be populated?

While the Spanish boom is coloured with terms such as airports and art centres, what we have in Ireland is one of Quinns and McNamaras, individuals that did no use to this country other than indebt us with useless property. We have two Luas lines that don’t connect, one decent new airport terminal and a national theatre that still sits languishing in its 1960’s box even after ten years of debates about moving it to a better location. So forgive me for having some sort of positive attitude to those follies in Spain, many of them I use quite often with countless millions. 

Saturday, August 25, 2012

Cautious Optimism As Irish Bonds Dip Below Pre-Bailout Levels

Irish bond yields: Bloomberg

It is of some welcome relief and a moment to celebrate with the news that this week saw the yield on the government’s bonds due to mature in 2020 fall below 6% for the first time since the bailout. This is in fact a fraction lower than Spanish bonds, a country that did not have to take a full sovereign bailout from the Troika and not far off Italian yields either. For some it would be seen as vindication for austerity, that the extreme cuts demanded by the bailout are working. However this is probably not the reason.

When one compares the countries that have requested a bailout from the Troika or are on the watch list for one, there is a slight difference between those nations and Ireland and Portugal, whose bonds also this week dropped to pre-bailout rates. The difference is that once Ireland and Portugal requested a bailout, those two countries have implemented with very little hesitation or procrastination the entire programme of austerity requested of them as terms for receiving the bailout money. The austerity has been exceptionally painful for both nations but they have been unwavering in their implementation. Neither country has called for more time in implementing austerity. Contrast this with Greece where virtually all trust has been lost due to their ducking and diving and this week’s request for two more years to fully implement austerity. One can also contrast Ireland and Portugal to a lesser extent with Spain, where the government of Prime Minister Mariano Rajoy consistently drags its’ feet in implementing structural reforms, tackling vested interests and coming to terms with the shocking debts of its local banks and strongly independent regions.

The reduction in bond yields should not be seen as austerity working. In fact the austerity has resulted in a depression in domestic demand in Ireland that Irish GNP, which is a measurement of the economy less the outflows from multinational entities has been almost consistently decreasing since 2007. The size of the economy is still significantly below pre-crash levels with austerity exacerbating the situation. Ireland has been fortunate in that its highly export orientated economy has held up in the past few years, albeit in very specific fields such as pharmaceuticals and to a much lesser extent agricultural produce. The fruits of this growth have not fed in to the domestic economy. This has continued the historical deviation between GDP and GNP, the former holding up well the past few years but there still seems to be no end in sight to this exceptionally long recession domestically in Ireland.

The reduction in bond yields should be seen as a large part due to the unwavering implementation of austerity even in the face of it causing a prolonging of the recession. It is a badge of confidence given to us by the markets, which have in the past shown extreme displeasure in half-baked proposals and shoddy implementation of reform and austerity in other countries. Markets do not like to be surprised and like us all, find comfort and satisfaction in sticking to the book. It is in essence an award for doing everything that had been asked of us even if it was not all for the best.

The government should not become complacent for without growth the austerity will become an uncontrollable death spiral for the Irish economy. Bond yields could easily shoot up if the economy continues to contract, thus making the level of debt larger in relation to the size of the economy thus necessitating more cuts. That is a real danger for Ireland, as the world economy seems to be heading for a slow down whose magnitude we have not fully grasped yet. Therefore one should be allowed to celebrate but with extreme caution. 

Friday, August 24, 2012

Todd Akin and the Issue of Abortion

There has been much deserved anger directed at Missouri’s Republican candidate for the Senate Todd Akin this past week. Mr. Akin recently asserted in a television interview that women do not get pregnant from what he called “legitimate rape” and that the bodies of women have a way of shutting down and preventing conception.  Virtually the whole of the Republican Party has either disowned him or have openly come out to state he should step down from the race but the representative from Missouri has refused to do so. That he has apologized for what he called words being taken out of context does not reduce the stupidity of his actions and opinions in relation to rape and the rights of the fetus.

This issue brings up an interesting view of many Republicans in relation to abortion. In the recent past Todd Akin with Republican vice-presidential candidate Paul Ryan co-sponsored a “personhood” Bill that would have given full rights to a fetus upon conception. This is not a new idea within the ranks of conservatives in the United States and especially evangelicals. However conservatives have been trying to justify such an extreme view in relation to abortion, with many believing that under no circumstances should a termination be allowed.

What this extreme opinion creates is heated debate over how certain pregnancies happen, most importantly in relation to rape. It is the opinion of this writer and many others that a woman should have the right to terminate a pregnancy if it was a consequence of rape. Rape is the upmost violation anyone can happen upon them and to carry that fetus to term when the woman does not want it is a horrific, nine-month long ordeal that I would never wish upon someone. In essence it is as if the rape continues after the initial violation.

It seems to be a similar opinion of many conservatives who advocate for banning abortion. However because of their extreme and blinded views being attacked by people who have the same opinion as me, some sort of twisted deflections and opinions are thrown back at us. Todd Akin’s attempt to categorize rape and state wildly unfactual biology is a perfectly distilled extreme example of this. These advocates of a complete ban on abortion are aware of the wrong this stance causes and attempt to find excuses or obfuscate.

The banning of abortion under all circumstances is an ignorant, unwieldy position to take and to categorize rape in to less malicious terms should be completely condemned. The simple, inexcusable fact is that rape is rape, no matter how it occurs. Todd Akin demeaned women with his statements recently and showed complete contempt for this shockingly prevalent vicious act. For this reason the representative of Missouri should take the advice of many in his party and step down. 

Thursday, August 23, 2012

If You Shout the Loudest, More People Will Hear You. The Reason Why The Republican Party May Win Big This November

It is fair to say in the world we live in today we are bombarded with a cacophony of many forms of media. All around us we are besieged by information, news and opinion. With the growth of the Internet, the traditional pillars of media, where we accessed information has sublimed into countless forms from blogs to online talk shows to forums. In the past Americans had access to only three stations and a smattering of local papers. With it came a large, mostly non-migratory audience with which one could easily influence. Who would think now that a simple editorial by news anchor Walter Cronkite in 1968 about the Vietnam war would make LBJ say in private despairingly “If I’ve lost Crokinte, I’ve lost middle America” X1.

Today audiences have atomized in to multiple, at times migratory groups. Where some sort of consensus prevailed over large groups, now the world is a friendly environment for like-minded people to react together, fostering at times extreme views. That there are now so many of them means that to be heard, to influence, to persuade (or denigrate, depending on your opinion), one must shout above the raucous environment.

Right now in the United States conservatives, especially the evangelical, Tea Party kind are shouting the most. Whether it is Rush Limbaugh, Glenn Beck or Bill O’ Reilly, all they have in common is their ability to howl or berate others. It riles some and in that process galvanizes others to their cause. No matter what newspapers you read, blogs you look at or peruse through the selected articles on websites like RealClearPolitics X2, what you see is a mad, at times angry but certainly mobilized group of people. It is almost primeval in intent but it is nonetheless effective, especially in this increasingly polarized political environment.

The Republicans and their supporters are angry, fuelling paranoia within about the threats a supposedly socialist, possibly un-American President Obama creates for the nation. Whether it be about abortion, increased government or medical “death panels”, they are compelling whipping boys in influencing potential voters this coming November. The Democrats on the other hand seem a disheartened bunch. Although passing (and later validated, somewhat by the Supreme Court this June) probably their most cherished policy of universal healthcare, they have been winded by the blows of the Tea Party two years ago and have been slowly worn down since like water to a rock. They certainly seem the defensive of the two parties and have not come out fighting as hard as their rivals have.

Neither the President nor the Democratic Party has fully latched on to issues as forcefully or evangelically as the GOP. When the Occupy movement rose up last year, there was some meek support and weak notions of association with the cause but nothing on a par with the Republican Party and their visceral fear of government overreach and abortion. They are fearful of taking a serious hold on major issues. The Affordable Healthcare Act is seen as a poisoned chalice when it should not be. The reason why the Healthcare Act is damaged goods to many Democrats is because the Republican Party have managed to fashion the debate to their own cause and consistently attacked it while the Democrats hide like townsfolk during a siege. Some fight has been found within the President’s campaign after the nomination as Romney’s running mate of Paul Ryan, forcefully campaigning that the Republican plans to gut the popular Medicare. Nevertheless one feels that the Democrats and other liberal advocates have been feeling disillusioned and not shouting loud and advocating their policies enough. In the past and especially the Obama campaign of 2008, Democrats and liberal groups were effective in getting people to the poll booths but that is not enough. One must influence and then aid their movement towards the poll booths.

Being able to shout the loudest has allowed the Republicans to fashion the debate, whether it is misguided, deluded or just plain lies. They have manhandled the loudspeaker at the town hall meeting and are shouting from the rafters and some of those people at the back are nodding to what they say. For this reason, the Democrats and liberals need to be more emboldened for the sake of the election campaign. In some ways the actions of the Republicans and conservatives is beneath them and any respectable individual but they need to stand up more and raise their voice. If not, the Republican Party will win big in November. 

Wednesday, August 22, 2012

Ryanair, Aer Lingus And The Slots of Heathrow

Heathrow from Google Earth

This week saw another twist in that seemingly never-ending mating dance Ryanair has been doing to woo Aer Lingus. It seems that Michael O’ Leary and his airline are flinging everything but the kitchen sink of ideas in their attempt to acquire their fellow Irish carrier and rival. It must be desperate times because this proposal seems to be the oddest and probably one of the most controversial. Ryanair are fully aware that their major obstacle in taking over Aer Lingus is on competition grounds. A merged airline of the two would have a virtual monopoly on many routes from Ireland but especially on one of the busiest routes in Europe, that between Dublin and London. Only two other airlines fly between London and Dublin, the tiny, premium and businessman-orientated Cityjet flying in to London City Airport and British Airways, which recently took over the mantle from BMI, the airline they acquired last year.

In their apparent delusion, Ryanair this week stated that to alleviate competition fears, a potentially merged Aer Lingus and Ryanair would sell lucrative take-off and landing slots owned by the former at Heathrow to other airlines such as Virgin Airlines. Virgin Airlines has been developing a stronger emphasis of feeding passengers through its Heathrow hub for long haul destinations, announcing new routes from the London airport to Manchester this week and would with relish snapping up the slots if they were to come up for sale. It is probably the opinion of Ryanair that this may incentivize Virgin to open a new route to Dublin as it has done with Manchester and allow the Aer Lingus Ryanair hybrid to concentrate on the low cost model both Irish airlines espouse and alleviate fears of a monopoly on the Dublin London route.

The problem with this proposal is that it ignores the strategic value for the country and the state as major shareholder in Aer Lingus of owning slots, the third most of any airline in one of the world’s most important airports. Indeed in the preliminary process of privatizing the former state airline, the Fianna Fail led government at the time even considered creating a separate holding company to keep the landing slots in state hands, such was the importance of the landing slots considered at the time. With Heathrow running close to 99% capacity and debates about its expansion, landing slots at Heathrow coming on the market are extremely rare. The only few times in the past few years that slots have been up for trading have been due to competition rulings to prevent a dominance of one carrier in the international hub. This has been the case with IAG, British Airway’s parent company and largest owner of slots after the airport’s acquisition of BMI, the second largest last year. For this reason, the importance and value of the slots and the effect of selling them should be considered off the table.

Ryanair has consistently stated that it intends to run the two airlines as separate entities with Aer Lingus concentrating on long haul and certain short haul routes. If that is the case, it seems to be at odds with selling slots at an airport primarily dedicated to that. Just as Virgin and other airlines use Heathrow to feed passengers through it on long haul routes, there is a compelling business opportunity for Aer Lingus to keep the slots, whether or not it is acquired by Ryanair. It is also vital at retaining that feed for international business people who would balk at switching airports in London to get to Ireland. While Ryanair has said it does not intend to sell all the slots, reducing capacity in an increasingly globalized world in which hub airports like Heathrow are vital routers does not make sense.

This could all be a game by Ryanair for ulterior motives. Ryanair also this week mooted taking a controlling stake or buying out totally its London hub Stansted. Stansted is finally coming on to the market after BAA, who also own Heathrow gave up its three year legal battle to retain it. It was forced to sell it, ironically for Ryanair by a ruling from the Competition Commission who found that BAA had an unfair monopoly on airports in the London area. Ryanair will have rivals in its mooted plan to take control of the airport in the shape of Qatar Holding and Manchester Airport Group. It seems that both issues are based around a desire to concentrate on its own existing hub of Stansted at the expense of Heathrow, which it finds quite rightly an obscenely expensive airport to operate from.

The selling of slots at Heathrow seems to be a misguided offering for one of the entities that holds the biggest obstacle to Ryanair acquiring Aer Lingus, the UK Competition Commission who have been investigating  Ryanair for quite some time. The selling of the slots, even a few would be a bad decision for the future of a merged company and the country. It smacks of exasperation from Ryanair in its third attempt at acquiring its Irish rival. 

Saturday, August 4, 2012

When an Airline Just Can’t Take A Hint: The Case Against Ryanair Buying Aer Lingus

It really is beginning to resemble a scene out of a high school movie. Time and again the big jock Ryanair comes up to the proper girl Aer Lingus: “Girl I’m the full package. I’ll make you feel good!”, all the time posturing like a safari animal at its potential mate. The girl snaps back that she is way too worthy to be wasted on with some big guy like him while all the time looking for that white knight to confront the jock and sweep her off her feet. However the jock just won’t get the hint and continues the pursuit while all the time the girl waits for her rescuer. What is one to make of it all and what will be the outcome? That is again the question we are asking ourselves these past few weeks as Ryanair makes yet another bid for its domestic rival Aer Lingus.

I shall first make an admission. Anyone who knows me is well aware of my distaste for Ryanair. While I give it respect for its prowess and vicious pursuit of markets and revenue, I just would prefer to fly someone, anyone other them. While Ryanair’s business model is admirable, cutting the costs to the bone, the incessant additional charges and penalties makes life confusing and frustrating. It has led in many cases to a narrowing in the gap of flight prices between the Irish no-frills airline and other airlines on numerous destinations. While once the vast discrepancy in price between Ryanair and airlines such as Aer Lingus meant it was sensible to take the former, more often than not it is no longer the case.

For this reason I would like choice going somewhere, that being with or without Ryanair. This is not just an issue of taste and comfort but a healthy means of fostering competition. For many in Ireland you have just one alternative to Ryanair and that being Aer Lingus. On flights between Dublin Airport and Europe, both airlines constitute an 80% share of traffic. This share is even higher in the other major airports in the Republic such as Cork and Shannon. It is without doubt a significant amount, which if under the control of one company would constitute a virtual monopoly. This would not only create a monopoly on air traffic on many destinations but for an island nation like Ireland an enduring, dominant control on travel in and out of the country.

Previous attempts to take control of Aer Lingus by Ryanair have for this reason been struck down by the government, who have a controlling stake. Competition authorities, domestically and in Brussels have also ruled against any form of merger. Furthermore Aer Lingus has always declined every offer by Ryanair as undervaluing the company and its future potential. This lady is not to be taken.

So why is the situation different now? There are a few reasons, two of which feel like a game of poker. First of all Ryanair can scent blood from a financially wounded government. Shorn of its fiscal independence under the bailout by the Troika of the EU, IMF and EU Commission and mandated to divest of stakes in companies, Ryanair sees that the coalition has a weak hand compared to before. The government in the airline’s opinion will sooner rather than later have no other choice to sell to whoever is interested, even if it is Ryanair. Second of all it sees this new offer as a way of smoking out other potential suitors lurking in the dark. This seems to be in relation to Abu Dhabi’s Etihad, which controls less than 5% of Aer Lingus shares but is increasing its co-operation with the airline. Ryanair has seen how Etihad has over the years increased its stake in Ryanair rival Air Berlin and fears a repeat with Aer Lingus.

However the main argument from the Ryanair camp this time is something completely different. It has advocated a tie-up with Aer Lingus as part of a necessary and unrelenting movement towards consolidation between multiple European airlines, which will benefit the industry and customers. Ryanair feels that it would be in the best interests of both companies and the country to tie-up. It points out to recent events in this regard, such as British Airways merging with Iberia, Air France with KLM and Lufthansa buying Swiss.

The major issue against this argument is that in virtually all these consolidations bar British Airways buying out BMI last year, they have been cross-border. There has been no precedent for the kind of purchase envisaged with Ryanair buying Aer Lingus. The issue of competition within the domestic Irish market continues and considering the economic situation, enticing other airlines to fly from airports in the Republic and creating new competition is slim to non-existent. Many would in fact be too fearful considering Ryanair’s history in relation to snuffing out rivals on many routes. Even if Ryanair promises to keep the two entities as separate with their respective business models as Michael O’ Leary has advocated, it is still not in the interests of competition.

It is however in the interest of the country and the government to refuse this recent offer by Ryanair for Aer Lingus. While Ryanair may think the government has a weak hand, in fact it has the opposite. Positive signals about more independence in fiscal policy by the Troika means the government may not have to divest of its stake in Aer Lingus right now, if at all. Aer Lingus has also begun to tackle structural weaknesses such as its pension deficit and also realized a profit of close to 50m euro in the last financial year. This should stand some way in the government’s favor in keeping a controlling stake in the company compared to other industries in which it holds a significant share of the market such as energy and forestry

 Furthermore, advocating the Troika’s stance on increasing competition in the domestic market to foster growth, it can argue that a tie-up between the two airlines would create the opposite of that in relation to air travel. Finally, people should have the choice of the kind of air travel they want, whether it be the basic no-frills style of Ryanair or the more comfortable Aer Lingus. If this third attempt fails to succeed, maybe Ryanair should finally take the hint and move on. 

Friday, August 3, 2012

Some American Candidates Shouldn’t Leave The Country

August begins with Mitt Romney back on US soil and for many, including I would say a fair few of his campaign staff and influential Republicans that is a welcome relief. The presidential candidate flew home , coasting on what seemed like a wave of criticism from the media and other politicians after his trip to Britain, Israel and Poland. To say his foreign trip was a disaster would be harsh but it did have its fair share of gaffes, all of which raise doubts over the man who is determined to be president and with that the position of Commander in Chief.

Taking a sporting analogy considering the ongoing Olympics, let’s have a look at his “performance” over the past week. In London he had the audacity to question the security preparation for the Olympics. Mitt Romney appeared to believe being the so-called saviour of the successful Salt Lake Olympics, which occurred shortly after 9/11, allowed him to state doubts about the recent mess-up concerning security contracts for the Olympics. However it appeared by many in the UK to be like someone who you invited to your home for dinner and openly begins to question the menu and d├ęcor. It elicited serious and bitchy put-downs by the prime minister and celebrated US Olympian Carl Lewis who stated: “some Americans shouldn’t leave the country”.

Mitt was probably glad to sprint away from that gaffe and the infamously rabid British press to the more hospitable surroundings of Israel, which was to contain a number of fundraisers. Here he would comfortably tap wealthy Jewish supporters for his campaign. In an apparent desire to please possible Jewish donors, he pronounced Jerusalem as Israel’s capital; a controversial statement not generally recognized internationally and thus legitimizing the occupation of territory taken by Israel in the Six Days War. If that was not enough, he dived further in to the touchy politics of the region by remarking that Israel’s economy was larger than the Palestinian economy because of cultural differences between the two. This not only ignored the fact that large parts of the Palestinian economy are under Israeli embargo, it touched a racial nerve implying some form of cultural inferiority among the Palestinians. While getting muted yet welcoming praise from the Israeli Prime minister who he has known for many years, the Israeli leg of his trip showed incompetence in relation to the quagmire that is Israeli-Palestinian relations. There would certainly be no points from the Palestinian judges during this round

Poland was the final stop in Mitt’s foreign trip, a former stalwart in what Secretary of Defence under George W. Bush, Donald Rumsfeld called the New Europe. Poland was chosen by Romney, like the other two countries for being allies that “stood for freedom”, whatever that meant to him. Indeed he got praise from the leader of the Solidarity movement Lech Walesa but yet again, the gaffes continued. This time however it was members of his own staff who slipped on the final hurdle. Angered by the growing criticism emanating from the US media after the first two legs of his trip, Romney’s press secretary Rick Gorka lost his cool when pressured by journalists at the Tomb of the Unknown Soldier in Warsaw. He snapped back irritably to the press to “Kiss my ass. This is a holy site for the Polish people”. Needless to say the irony of such a statement was not lost on the journalists. Yet again, Romney missed the bar.

In retrospect we can say it was not a gold-medal performance by the Republican candidate. Compared to Barak Obama’s foreign trip during the 2008 campaign, where the then senator was fawned over by the European press and treated like a rock star at a speech at the Brandenburg Gate, Romney’s was a bit low key. The constant gaffes accentuated the lingering feeling by many that the former governor lacks a significant amount of tact in communicating to others and the media. Since these are the people he could be dealing with come January to work internationally combating Middle-Eastern and European tension, things could be a little uncomfortable. However the negative reaction should be overall benign.

The funny aspect of it all was in the response from Romney’s campaign team to the trip and the media reaction to it. The team apparently attempted to play down the significance of the trip, saying that instead of wasting time and effort on foreign policy, they should have concentrated on Mitt Romney’s economic and political policies. Granted there is some merit to this view. To many Americans foreign policy is an insignificant matter in deciding on which candidate to vote for. The issue of the economy is paramount in the minds of Americans in this presidential campaign. So one must ask, why make the time and effort to make such a significant foreign trip when the economy is still sclerotic and President Obama has taken a poll lead in the key swing states of Florida, Ohio and Pennsylvania? The only part of this trip with some sort of merit would have been the Israeli trip to raise funds for the campaign.

Mitt Romney’s active foray in to foreign policy certainly did not get him on the podium in any way this past week. It continued to emphasize the character traits of his campaign and of his own character; that of being slightly out of touch with the people he is trying to persuade and coddle. It seemed to reinforce his campaign’s exhortations to concentrate on domestic issues such as the economy. So maybe this presidential candidate should have stayed at home this past week.